Zhang Zhongmou revealed that TSMC won an important battle in the early stages of its establishment and successfully won the “management rights battle” of Philips.

Zhang Zhongmu’s New Autobiography Released

The second volume of "The Autobiography of Zhang Zhongmu" is now available. Released on November 29, this book provides insights from the founder of TSMC, Chang Chung-mou. He shares his experiences in the semiconductor industry and details the history of TSMC.

Zhang reflects on his career path, describing his decline after achieving success at Tak Yi. He eventually left Tak Yi and took on a role at the Industrial Research Institute in Taiwan, but faced difficulties and resigned. In February 1987, he founded TSMC, marking this as the pinnacle of his career.

One major topic Zhang addresses is his "battle of management rights" with Philips. This conflict was crucial for TSMC’s independence. Philips, which held a 27.6% stake in TSMC, originally aimed to increase its ownership to over 50%. This move prompted tense negotiations.

Philips and TSMC’s Shareholder Agreement

Philips had a clause for "stock purchase rights," allowing them to propose a takeover of shares before September 1989. This clause caused much concern for Zhang in the early years of TSMC. By 1989, both parties disagreed on share valuation, even as TSMC’s performance improved significantly.

Before TSMC could go public, it had to terminate its shareholder agreement with Philips. Zhang approached Philips to modify the agreement, but negotiations stalled over the price. Eventually, they agreed on a price of 21.79 yuan that left Philips with 40% ownership and canceled the previous agreement.

TSMC’s Public Listing Success

On February 18, 1994, TSMC applied to list on the Taiwan Stock Exchange. The stock debuted at 90 yuan and experienced a surge, reaching 142.5 yuan within days. Zhang calculated that original shareholders could see a 14-fold return.

TSMC later listed American Depository Receipts (ADRs) on the New York Stock Exchange in October 1997. By 2005, Philips had sold most of its shares, realizing a profit of over 135 times its original investment.

Conclusion of Share Sales

Zhang acknowledged that a strong, non-intrusive major shareholder is vital for a company’s stability. For this reason, the National Development Fund, TSMC’s largest shareholder at one time, decided not to sell additional shares after 2016. By early 2022, this fund’s profits surged over 600 times from its original investment.

Zhang Zhongmu’s autobiography provides a fascinating narrative of his journey and strategic battles in shaping the semiconductor landscape.